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U.S. Pressing EU Envoys for Added Russia Sanctions

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The U.S. pressed the European Union to expand sanctions against Russia during a private meeting as the Obama administration prepared to act alone if necessary in response to the Ukraine crisis.

EU ambassadors were called to the White House yesterday for the closed-door session at which the U.S. urged the adoption of tougher measures to halt what American officials called Russian President Vladimir Putin’s destabilizing actions in Ukraine, according to three participants.

The Obama administration is ready to act unilaterally if EU leaders, during a meeting in Brussels tomorrow, balk at imposing sanctions that risk hurting their economies as well as Putin’s, said several U.S. officials involved in the deliberations.

The U.S. has drawn up sanctions designed to pinch Russia’s economy — with or without its European allies — by targeting financial institutions and the defense sector, the U.S. officials said, and measures could be imposed as soon as this week. The meeting participants and U.S. officials all spoke on condition of anonymity citing the sensitivity of the matter.

President Barack Obama, who would prefer backing from Europe, will wait at least until after tomorrow’s EU meeting to see if the allies back tougher penalties, these officials said.

‘Match’ Rhetoric

As it pushed for European support, the Obama administration issued a “fact sheet” yesterday that said Russia is continuing a “policy of destabilization” in Ukraine, providing heavy weapons to pro-Russian separatists. Russia is also building up its own military forces near the Ukrainian border, according to the State Department.

“While Russia says it seeks peace, its actions do not match its rhetoric,” according to the U.S. statement. Russia has denied previous allegations that it’s responsible for fomenting turmoil in Ukraine.

German Chancellor Angela Merkel said today in Croatia she didn’t want to “preempt” tomorrow’s EU meeting because not all 28 members of the bloc have been heard. In Warsaw, Polish Foreign Minister Radoslaw Sikorski said today that the “unprecedented” fighting, including use of tanks and other heavy military equipment, is a “test of credibility” for the EU ahead of bloc’s summit.

French officials said further sanctions may be warranted because Russia hasn’t met conditions set by the U.S. and EU. Even so, they said tomorrow’s decisions should be limited to targeting new individuals or entities, not moving to so-called Level 3 sanctions, or measures that would hit entire economic sectors.

Weapons Deliveries

In the White House meeting, U.S. Deputy National Security Advisers Antony Blinken and Caroline Atkinson made the case that the EU can take measures that do more than add names to a blacklist, yet are less disruptive than sanctioning an entire sector of Russia’s economy, according to the participants.

Blinken and Atkinson suggested the EU could halt weapons deliveries to Russia, a move that would stop France’s 1.2 billion euro ($1.6 billion) deal to supply Russia with two Mistral helicopter carriers. Another proposal was to block targeted Russian entities’ access to debt markets.

Blinken also shared the latest U.S. intelligence on the Russian deployment of troops and transfer of weapons, according to the participants.

Some U.S. officials say they doubt EU leaders will reach agreement on tougher measures at tomorrow’s meeting. EU policies need unanimous consent, and states including Italy, Austria, Slovakia, France and Greece have raised objections.

Allies’ Conditions

During phone conversations over the past several days, Obama and the leaders of the U.K., France and Germany reaffirmed the conditions that Russia must meet to avert a stiffer round of sanctions, including halting the flow of Russian weapons and fighters into Ukraine; helping enforce a cease-fire between the Ukrainian government and separatist groups; and achieving the release of more than 150 hostages held by separatists.

While Ukrainian forces have made advances against the separatists in eastern Ukraine, the risks of a broader conflict were highlighted by the downing yesterday of a Ukrainian aircraft, according to the government in Kiev. The An-26 transport plane was shot down in eastern Ukraine by a “powerful weapon” not previously used by the separatists, probably from inside Russia, according to Ukrainian President Petro Poroshenko’s website.

Dual-Use Technology

U.S. authorities are ready with penalties that would deny certain targeted Russian entities access to financing and dual-use technology, according to officials who spoke on condition of anonymity because the plans are not public.

One proposal would bar American financial institutions from buying or selling assets of targeted Russian banks linked to Putin associates or individuals involved in the Ukraine intervention, according to two other U.S. officials who spoke on condition of anonymity to discuss non-public information.

That would prevent U.S. banks from underwriting, buying, selling or trading a targeted institution’s bonds, effectively blocking access to debt markets and financing, and it’s a measure the U.S. could impose unilaterally.

Another proposal would stop U.S. sales of dual-use technology, such as spare parts for helicopters, machine parts and drills that also have military applications. The measure would have less impact if the EU didn’t impose a similar ban on European companies that sell Russia such products.

EU Deliberations

EU states have studied halting new financing for Russia from the European Bank for Reconstruction and Development and the European Investment Bank, according to two European officials who asked not to be identified because of the sensitivity of the issue. Russia is the top recipient of project-financing from the London-based EBRD, amounting to 1.8 billion euros last year.

The EU last week agreed to add 11 people to a blacklist that now includes 72 individuals and two businesses facing European asset and travel bans for backing rebels in Ukraine. That and a similar U.S. Treasury Department list have been dismissed by advocates of stronger action as symbolic gestures.

While many Obama advisers are urging stronger action on sanctions, even if the Europeans don’t go along, the president could decide to go forward with limited steps or wait longer in search of a consensus with Europe.

Laura Lucas Magnuson, a White House National Security Council spokeswoman, said in an e-mail today that the U.S. remains “prepared to impose additional sanctions, should circumstances warrant, in coordination with our allies and partners.” She declined to discuss the timing of any possible sanctions, or whether any penalties are coming at all.

Market Uncertainty

U.S. and EU leaders have sought to keep the threat of sanctions alive, with Merkel warning on July 2 that broader sanctions haven’t been ruled out. A day earlier, U.S. Treasury Secretary Jacob J. Lew said more penalties could drive Russia into recession.

EU and U.S. officials insist the mere threat of additional sanctions has hit Russia’s economy by stoking market uncertainty and discouraging investment. Russia is struggling to steady its $2 trillion economy in the face of an estimated $80 billion in capital outflows in the first five months of 2014 and a ruble that’s down more than 4 percent against the dollar this year.

Foreign banks have pulled back on lending to Russian commodity producers, with syndicated loans for Russian raw-material companies falling 82 percent in the first six months of 2014 from the previous year.

Russian Retaliation

Putin has exploited EU discord, alternately threatening to retaliate if further steps are taken — or dismissing sanctions talk as bluster. On July 8, Deputy Finance Minister Sergey Storchak said Russia would prepare “serious countermeasures” in the face of any sectoral sanctions.

While northern and northeastern nations in Europe, including Poland and the Baltic states, are pushing for stronger action, most EU members remain opposed or lukewarm to further steps, according to several European diplomats.

The reasons include a reliance on Russian capital, trade and tourism and concern that Russia would strike back by cutting energy supplies. Twelve EU states get more than half their gas from Russia. France objects to any military embargo that would imperil the Mistral delivery to Moscow, while the U.K. has expressed concern that banking bans would disproportionately hit its financial sector.

Merkel, whose country is a top Russian trade partner, has grown frustrated with Putin’s intransigence and is becoming more supportive of tougher penalties.

The U.S.-EU disunity has prevented the allies from acting decisively against Russia in response to the Ukraine crisis, said Andrew Weiss, a former Russia and Ukraine policy director at the National Security Council under President Bill Clinton.

“The U.S. is all sanctions and no diplomacy; the Europeans are invested in diplomacy, not sanctions,” said Weiss, who oversees research on Russia for the Washington-based Carnegie Endowment for International Peace. “It’s very lopsided.”

How Unrest in Ukraine Is Sending a Wave of Refugees to Russia

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Tens of thousands have fled in the wake of ongoing fighting between government forces and pro-Russian rebels in the Donetsk and Lugansk regions.

Rostov-on-Don—Dmitry spent ten years working on the four-room lavender house his parents left him near Stanitsa Luganskaya in eastern Ukraine, installing gas and running water. Rather than going out on the weekends or buying a car, his hobby was home renovation, the 30-year-old said. But he dropped everything and fled to Russia after shelling—he said by government forces—over the weekend of June 13 destroyed the roof and windows of his house. YouTube videos uploaded by locals on that day showed bombed-out homes and burnt-out cars from what they said was a bombardment by Kiev’s troops.

“It was hard to go and leave my house behind,” said Dmitry, who declined to give his last name. “But my fear for my life beat out my love for my home.”

Since then, Dmitry has been staying in a dormitory of the Southern Federal University in Rostov-on-Don with more than 100 other refugees, just a small portion of the tens of thousands who have fled Ukraine in the wake of ongoing fighting between government forces and pro-Russian rebels in the Donetsk and Lugansk regions. (Some have also escaped to Kiev and other parts of Ukraine, but the largest flow of people is by all accounts to Russia.) Although the rebel stronghold of Slavyansk fell to Kiev’s “anti-terrorist operation,” civilian casualties have been mounting in Lugansk as fighting has intensified there.

Russia has played a role in the escalating conflict in the Donbass coal-mining region in eastern Ukraine: Russian fighters, at least some of them volunteers, have been arriving in Ukraine in the dozens, and Russian state-owned media were exacerbating anti-Kiev sentiments there long before the start of the rebellion. But Moscow has also taken steps to alleviate the human suffering, in particular offering humanitarian aid to be delivered to eastern Ukraine, ostensibly on Kiev’s terms. The proposal was turned down.

Meanwhile, the Ukrainian government has fallen short of its promises to help the civilian casualties of the conflict. President Petro Poroshenko’s call in June for a humanitarian corridor to take people out of the Slavyansk was never realized during the siege of the city, several residents have said. (Ukraine’s interior minister announced that a humanitarian corridor had been opened on Sunday, the day after rebels withdrew and Slavyansk was retaken by government forces.) The Ukrainian government has no central policy to address the refugee crisis, and most assistance comes from private citizens, the regional representative for the UN high commissioner for refugees in Kiev said last month.

Now the Russian emergencies ministry and volunteers are housing and feeding refugees from eastern Ukraine, transferring them to other cities and helping them register for temporary asylum and find work. Some of the refugees have been sent to Russia’s underpopulated Far East, and other regions such as Krasnodar have said they have work vacancies they would like to see filled. Those fleeing see Russia as their savior: In the words of Alexander, a coal miner from Lugansk, “Putin is the best tsar.”

Well over 400 people have been reported killed in eastern Ukraine since the conflict began in April, and at least dozens of civilians have been killed, according to video evidence and reports from local authorities. The violence fueled a humanitarian crisis in Slavyansk, where most residents have spent over a month without water or electricity, and drove people out of cities like Donetsk, Kramatorsk and Lugansk. United Nations High Commissioner for Refugees António Guterres has reported that at least 42,000 people have been internally displaced.

The UNHCR also said 110,000 Ukrainians have left for Russia this year, although a significant portion of that number is likely work-related migration. Nonetheless, tens of thousands have come as refugees. The emergencies ministry said that 18,650 people were living in temporary housing as of Monday, and 7,000 had already been transferred to cities in southern and central Russia. Private families, municipalities and civic organizations have been housing hundreds, if not thousands, more.

Making it across the border has often been dangerous due to heavy fighting at border points that government troops are trying to take back from rebels. In addition, Ukrainian-controlled crossings in eastern Ukraine were closed last week, and some refugees abandoned their cars so as not to stand in lines at the border stretching for several kilometers. Nikolai Leikin, from a village called Cherepovsky in the Lugansk region, said he and a dozen other young men and women walked miles through open fields to get into Russia because of fighting at the Dolzhansky border crossing, which was retaken by Ukrainian troops last week.

Civic groups, including some with close ties to the rebels, have helped many get out. The Communist Party was organizing buses from Slavyansk to Crimea for women and children, and a rebel group called the Humanitarian Battalion of Novorossiya (“New Russia”) has been helping with transport, housing, aid packages and job hunting. According to director Yekaterina Gubareva, the wife of Donetsk pro-Russian leader Pavel Gubarev, the battalion works with rebels to protect refugee convoys to the border and hires transportation to take them from there.

“People who are active and civil organizations say they’re ready to house refugees and give them work.… People come to us with offers,” Gubareva said. She added that some refugees were working in Russia as seasonal laborers picking fruit and vegetables, but insisted that their pay was decent.

The point of arrival for those who make it through the border are tent camps operated by the emergencies ministry, such as the one outside Novoshakhtinsk where Leikin and his friends were first taken. An average of 200 to 250 people have been staying in the half a dozen huge blue and orange tents in the camp each night since it was established on June 20, according to camp director Vladimir Skomorokhov. The number spikes with fighting across the border: On Friday, sixty-eight people were staying in the camp, but that grew to 410 on Monday after fighting over the weekend, including shelling in Lugansk that killed at least one civilian.

Other tents hold a cafeteria, a medical center, a federal migration service center, a chapel and a play area for the many children. According to the camp doctor, volunteers are constantly bringing donations of medicine, toys, clothes and food, as most refugees came with only light bags.

On a recent evening, those staying at the camp gathered for a dinner of boiled buckwheat, chicken and carrots, followed by tea with cookies. Emergencies ministry employees played volleyball with residents over a makeshift net, and no one seemed bothered by a single distant explosion heard from the direction of the border. After all, much heavier shelling there had woken the camp up at 5 am the day before. Nearly a third of those at the camp were kids.

Lena Moshkanova, her daughter Rita Rischenko, granddaughters Varvara and Maria and their black-and-white kitten fled Slavyansk on June 17. Worried about the safety of the children, the family also feared going hungry since social payments to Slavyansk were cut off by Kiev last month, including Moshkanova and Rischenko’s benefits as a pensioner and single mother.

A few days before they left, Moshkanova had come under heavy fire from Ukrainian forces on her way to meet Rischenko and the girls. She was driving up to the crossroads at Semyonovka, a town just outside Slavyansk that has been largely destroyed by government shelling, when she saw a “line of fire” as explosions came down the street. She jumped out of the car and ran inside an abandoned tire shop. “They were firing, I was praying, yelling out ‘God help me,’” she said. A second attempt to cross ended the same way, and Moshkanova finally made it on her fourth try.

The question on everyone’s minds is whether to start a new life in Russia or wait to return home. Moshkavova and Rischenko planned to remain and apply for Russian citizenship. They were waiting up late on Friday for a bus to the Moscow region, where they were to board a transport plane to Khabarovsk in the far east of Russia. Refugees said state corporations there had promised mining jobs and housing, and 220 of them were planning to go. According to a migration service official at the camp, the majority of those arriving apply for year-long temporary asylum, but many also hope to eventually return to Ukraine.

“Our brain understands that we have to leave to save our children, but our heart is still in Donbass,” Moshkanova said.

At a children’s summer camp on the Azov Sea at Dmitriadovsky, a group of women who left their husbands behind in the Lugansk region agreed that “visiting is good, but being at home is better.” The Neklinovsky district of the city of Taganrog has organized housing for 795 refugees, including 387 children, in three camps where they typically stay six to seven people to a room. A local charity called Good Deed is paying the camp to put up the refugees for now, but the local authorities are trying to help them find work and housing with families in the Krasnodar region and elsewhere, according to local official Alexander Tretyakov.

Yulia Klimova, the mother of a 2-year-old and a 6-year-old, hopes to return to Sverdlovsk in the Lugansk region. “If there won’t be a road back, then we’ll stay in Russia and look for work. We are brothers with Russia,” she said.

“Your head is empty it, you just sit and think what to do next,” said Yelena, who came with her husband and six children to the Rostov dormitory on June 17 after nearby shelling broke the windows of their home near Metallist outside Lugansk. “If we go back, they will kill us. If we go somewhere else, we won’t know what to do. To ask for help constantly is not a way out.”

But Dmitry has already found work as an economist at a factory, pending his temporary asylum application, and is trying to bring other friends and relatives to Russia. “I call constantly and try to convince them to come,” he said. “Many don’t want to leave, if they’re living in homes that haven’t been hit by a shell yet.”

The turn of the tide

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THE Ukrainian flag flies again over Sloviansk, a former stronghold of eastern Ukraine’s separatists. Succumbing to some punishing shelling, the rebels retreated on July 5th, leaving behind a city blighted with bullet holes and bombed-out buildings. In areas they had vacated, unexploded mortars lay wedged into the asphalt.

After ending its unilateral ceasefire a week ago, the Ukrainian army has handed President Petro Poroshenko a symbolic and satisfying victory. Yet there is little sign of an end to the fighting that has claimed hundreds of lives in the past three months. Rather the fall of Sloviansk may herald a new phase of hostilities, around Donetsk, the regional capital. And if a protracted insurgency takes hold, Russia’s Vladimir Putin may come under mounting pressure to do more to help than he has done so far.

Mr Putin faces only unpalatable options. Having used state media to propagate the myth of a “genocide” of Russians in eastern Ukraine, he may find dumping the rebels outright to be politically untenable. Mark Galeotti of New York University argues that “Putin can’t just walk away.” On the other hand, escalation through more overt transfers of humanitarian aid, weapons and fighters would leave a struggling Russian economy vulnerable to further Western sanctions and its forces potentially bogged down in an intractable conflict.

Russian officials, including Sergei Lavrov, the foreign minister, have taken to saying that a negotiated settlement is their preferred solution. State propaganda has been toned down. Russia badly needs a deal with Kiev to supply Crimea, which it annexed in March, with water, electricity, gas and food. The threat of more sanctions is rattling Russian business.

The rebels, however, are not listening. They are calling the retreat from Sloviansk “a tactical decision”, and fortifying Donetsk for battle, building new checkpoints, blowing up bridges around the city and hunkering down in student dormitories. Leaders of Donetsk’s “people’s republic” complain that Mr Putin is not doing enough to help. They pledge to fight a real partisan war. Moscow has “a degree of influence” over the people’s republics, says Dmitri Trenin, director of the Carnegie Moscow Centre, “but no real control”.

Mr Poroshenko, for his part, appears emboldened. A spokesman for the National Security and Defense Council claims that rebels in Donetsk and Luhansk are in for a “nasty surprise”. The army has retaken several smaller, lightly guarded cities on the road to Donetsk. On July 8th Mr Poroshenko donned snappy fatigues to congratulate his troops in Sloviansk (pictured above). He promised to restore services to residents who have been without water or electricity for several weeks.

Since declaring an end to the ceasefire, he has replaced his defence minister and his chief of the general staff. He wants an army that will carry out his orders even if the result is bloody. Several things have improved the effectiveness of the armed forces. After nearly 20 years of neglect, they are being properly paid and have money to maintain equipment. American non-lethal assistance in the form of lightweight body armour and night-vision goggles has boosted morale. The supply by Russia of a few old tanks to the rebels in early June proved a tipping point in terms of the Ukrainian army’s willingness to fire on fellow citizens.

Mr Poroshenko, whose political survival hinges on fulfilling a promise to pacify the country, faces pressures of his own, including from far-right elements. Oleh Lyashko, a nationalist politician from the Radical Party who took over 8% of the vote in May’s presidential election, went to Sloviansk this week. Meeting a local politician in the city’s administration building, Mr Lyashko, wearing body armour and carrying a holstered pistol, launched into a tirade, forcing the man to write and sign a resignation letter ending with: “Glory to Ukraine, death to the occupiers!”

If the smouldering remnants of Sloviansk are any guide, the price of military victory in the Donbas could be devastating for Mr Poroshenko. He would be saddled with steep reconstruction costs and a deeply fractured region that Ukraine can ill afford. Referring to newly arrived Ukrainian forces in Sloviansk, an elderly resident, Tamara Khanina commented bitterly: “They bombed us, so how should I feel about them?” Mr Poroshenko also has to reckon with groups of men who, if not numerous, have found meaning in their lives by fighting against his government.

In Donetsk, a city of a million inhabitants, the next battle has already begun. Despite assurances that the government would not use air strikes, on July 8th Ukrainian forces hit a rebel position near an abandoned coal mine. The longer the fight goes on, the more likely it is that Mr Putin will feel forced to intervene. The Kremlin could provide better kit for the rebels or impose a no-fly zone, says Mr Galeotti. Such steps would allow Russia to exploit its superior air power, leaving Ukrainian soldiers no option but to engage the insurgents in close-quarter combat on the streets—just the kind of fighting that regular armies hate.

Igor Sutyagin, a Russian analyst at RUSI, a London-based think-tank, says that, if Kiev’s forces were to use the same tactics in Donetsk that proved successful in Sloviansk, it could lead to “a disaster, strategically and militarily” for Mr Poroshenko. But he thinks they can afford to be patient, because the insurgents have little local support and may number no more than about 15,000, a third of them from Russia. Mr Sutyagin reckons that, although Mr Putin is happy for instability to continue in eastern Ukraine, he will not do a lot more to help the rebels. Russian forces over the border have turned back separatists seeking sanctuary: the last thing Moscow wants is for the fighting to spread into Russia. For now, an edgy stalemate may suit all sides better than an escalation with potentially catastrophic consequences.

Ukraine conflict: EU leaders to push for new truce

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The leaders of France and Germany are to press Ukraine’s president to agree to a new truce in eastern Ukraine when they speak by phone on Wednesday.

President Francois Hollande of France announced the planned talks with Germany’s Chancellor Merkel and Ukraine’s President Petro Poroshenko.

Ukraine says it will not talk to separatist rebels until they disarm.

A separatist official in Donetsk city, where the rebels are regrouping after losing ground, ruled out any new truce.

Government forces recaptured several large towns from the rebels in recent days after resuming their “anti-terrorist operation” in the Donetsk and Luhansk regions.

In Donetsk itself, a city of more than one million people, the rebels have vowed to keep fighting the government, which they regard as illegitimate.

More than 1,000 people, both civilians and combatants, are believed to have been killed since the uprising began in April.


The French and German leaders previously discussed the conflict over the phone with Mr Poroshenko, who was elected president in May, on Friday.

Since that conversation, Mr Poroshenko and his government have hardened their rhetoric about the rebels, as they drive them back.

On Tuesday, Mr Poroshenko visited his troops in the battle-scarred town of Sloviansk, which the rebels abandoned after a government siege.

“Sloviansk was a symbol of terror and violence before,” he said. “Today Sloviansk is a symbol of the liberated Donbass [as the Donetsk and Luhansk regions are known].”

Promising to restore order, he said the government was “open to dialogue” with those who were “ready today to lay down their arms”. He also promised a “decentralisation of power”.

Russian Foreign Minister Sergei Lavrov said on Wednesday that the rebels were ready for “constructive dialogue” but in order for that to happen, they should not be “forced to submit to the authorities in power in Kiev”.

He called for a “humane approach” to those involved in the conflict, saying words like “subhumans and terrorists” should be avoided.

Mr Lavrov was speaking alongside Italian Foreign Minister Federica Mogherini, who is visiting Moscow. Italy has just taken over the presidency of the EU.

‘No compromise possible’

In an interview for Russia’s Komsomolskaya Pravda newspaper, the deputy prime minister of the self-proclaimed Donetsk People’s Republic, Andrei Purgin, said no truce was possible with the government.

He accused the Ukrainian military of taking 400 people “hostage” and of failing to provide “humanitarian corridors” in the conflict zone.

“Ukraine… doesn’t need people here so it bombs without regard to anyone,” the rebel official said. “Three months ago we could still chat about federalism but now no compromise is possible.”

The rebels’ military commander, Igor Strelkov, said separately that his forces were not strong enough to defend Donetsk city from the army. The separatist leadership planned to recruit a further 8-10,000 fighters, he said, with the promise of pay so that they could provide for their families.

The violence erupted after the separatists declared independence in the Donetsk and Luhansk regions, following Russia’s annexation of Crimea from Ukraine

Mr Poroshenko’s predecessor as president, Viktor Yanukovych, was overthrown in February after months of street protests in the capital, Kiev, at his pro-Russian policies.

Human cost of conflict

At least 250 civilians killed in eastern Ukraine since April, according to Ukrainian and rebel reports

Nearly 200 soldiers killed and 619 wounded since April, according to Ukrainian defence ministry

At least 800 rebels killed since April, according to rebels

At least 110,000 people have left Ukraine for Russia this year to date, most of them from eastern regions, according to the UN

Some 54,400 people have been displaced within Ukraine itself, the UN says

Putin’s silence on Slaviansk signals desire to de-escalate Ukraine crisis

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Personally…I don’t believe this….but worth reading for a different point of view.

Putin ignores rebels’ calls for military help

* Russian leader signals he favours de-escalation

* Putin may have achieved main goals

* Russia wary of threat of more Western sanctions

By Timothy Heritage

MOSCOW, July 7 (Reuters) – Three weeks before Ukraine’s army forced rebel fighters out of the strategic eastern city of Slaviansk, their commander made a desperate plea for military help from Russia.

“A week will pass, two, three, maybe a month, and the rebellion’s best fighters will be bled dry and, sooner or later, crushed and destroyed,” Igor Girkin, who is better known as Strelkov, said in a comments widely viewed online.

The appeal was met with silence by President Vladimir Putin, and on Saturday, as if on cue, Girkin’s outnumbered and outgunned forces abandoned the city after weeks of shelling.

The weekend’s events may be not just a turning point in Ukrainian President Petro Poroshenko’s military campaign against the rebellion led by separatists who want eastern Ukraine incorporated into Russia.

They could also suggest Putin is not about to replay in eastern Ukraine the sequence of events that led to Russia’s annexation of Crimea in March and that he is intent on de-escalating the crisis to avert the risk of new Western sanctions and reduce the threat of instability on Russia’s border.

In the past few weeks, he has withdrawn most troops massed near the frontier, asked parliament to cancel a resolution approving the use of military force in Ukraine and engaged in diplomacy with the West. Moscow has also signalled a willingness to allow stronger controls at the border, through which Ukraine says the rebels have received military supplies.

Barring a dramatic turn back towards armed intervention by Russia, Putin’s goal appears to be to find a way to reduce tension in Ukraine without losing face or popularity.

“As a result of four months of aggression in Ukraine, Putin found himself at a fateful fork in the road,” former Kremlin adviser Andrei Illarionov wrote in a blog posted on the website of liberal Russian radio station Ekho Moskvy on Saturday.

Abandoning the rebels risks a loss of support and could fuel opposition to Putin in Russia, he said, but the other choice – sending in the armed forces – would lead to an inevitable confrontation with the West.


Putin’s popularity has risen to new highs over his handling of the Ukraine crisis, in which the toppling of a president sympathetic to Moscow threatened in February to end Russia’s ability to influence events in a country it long dominated.

The reclaiming of Crimea in March stirred patriotism and won Putin almost unanimous praise at home, though the rebellion that followed in eastern Ukraine raised fears in the West that Moscow was about to send in troops, despite his denials that Moscow was orchestrating the uprising and supporting it militarily.

Putin reiterated in a speech to Russian ambassadors gathered in Moscow last week that he reserved the right to protect Russian speakers abroad by “using the entire range of available means – from political and economic to operations under international humanitarian law and the right of self-defence.”

But he has signalled repeatedly that he wants to reduce tensions – even though he may wish to keep them simmering just enough to unsettle Ukraine’s pro-western leadership.

Loath as he is to say it, Russia is increasingly worried that sanctions could inflict serious damage on its $2 trillion economy, which is already heading towards recession, potentially denting Putin’s popularity.

The reduction in tensions so far has helped strengthen the rouble and Russian shares, which rose last week to eight-month highs before slipping back.

This makes it no surprise that he had by late Monday made no public comment on the fall of Slaviansk, while Foreign Ministry remarks and state media coverage focused on humanitarian problems and the ferocity of the government forces’ onslaught.

Russia also sent a positive sign on its commitment to talks at the weekend by attending the latest meeting on ending the violence under the auspices of the Organization for Security and Cooperation in Europe (OSCE).


Putin could have another reason for de-escalation; he may already have achieved all he can in Ukraine, at least for now.

He may be gambling that what is already on offer from Kiev could be enough to satisfy the nationalist sentiment he has unleashed in Russia but could yet struggle to contain.

Poroshenko has drawn up a peace plan that includes promises of decentralisation and more power for the regions, such as the rebellious provinces of Donetsk and Luhansk, enabling them to build political and economic ties with Moscow.

The plan also offers guarantees for the rights of Russian speakers, one of the main demands set out by Russia and the separatists throughout the conflict.

Russia had sought a “federal” Ukraine where power was devolved even further and still wants Russian peacekeepers allowed into east Ukraine, despite concerns abroad that it might try to use them to resupply the rebels.

But the moves already outlined by Poroshenko offer Moscow an opportunity to maintain some influence in Ukraine, a former Soviet republic and a territory that many Russians consider the cradle of Russian civilisation.

Putin has also won what appears to be the most important concession of all for him – a step back by the Kiev leadership from a commitment to seeking NATO membership.

Putin has made clear many times that Moscow will not allow Ukraine to join the alliance that was its Cold War enemy because doing so would represent too much of a security threat.

“What did our partners expect from us as the developments in Ukraine unfolded?” Putin asked the ambassadors last week.

Answering his own question, he said Russia could not abandon Crimea “to nationalist and radical militants”, let its access to the Black Sea be limited – it has a naval base in Crimea – or allow NATO on to “the land of Russian military glory”.

“This would mean giving up practically everything that Russia had fought for since the times of Peter the Great, or maybe even earlier – historians should know,” he said.

EU Claims Right to Reverse Flow as Russia Protests

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EU Energy Commissioner Günther Oettinger on Thursday asserted European companies’ right to sell Russian gas back to Ukraine, flying in the face of warnings from Russian energy giant Gazprom as tensions continue to build over energy policy.

Energy companies in the EU have an “absolute right to dispose of gas bought from Gazprom at their discretion, including delivering it in reverse to Ukraine,” Oettinger said via his spokeswoman Sabina Berger, ITAR-Tass reported.

Moscow cut off gas supplies to Kiev in mid-June when Ukraine failed to meet a deadline to pay a $1.95 billion gas debt, despite extensive negotiations leading up to the deadline. Gazprom said Thursday that gas flows to the EU were continuing as normal, Reuters reported.

Gazprom head Alexei Miller said last week that the state-owned gas monopoly could retaliate against European countries if they were to sell its gas back to Ukraine through large-scale reverse gas flows.

“If we detect a reverse flow on gas-measuring stations in Europe, we may impose restrictions,” Miller said, ITAR-Tass reported.

President Vladimir Putin supported Miller’s position on Tuesday, although unlike Miller, Putin said that Ukraine was already taking gas intended for the EU. “In essence, [Ukraine] is getting our gas and they are paying one of our Western partners in Europe, who are not receiving these volumes,” Putin said.

“We see everything, but are not taking any kind of action at the current moment so as not to aggravate the situation,” he added.

Also on Thursday, Ukrainian gas company Naftogaz announced that 20 European companies, including the EU’s largest gas traders, had bid to sell gas to Ukraine via Slovakia via so-called reverse flow.

“The extensive Ukrainian market is very interesting for Europeans,” Naftogaz head Andrei Kobolev said, Prime reported.

In late April, Ukraine and Slovakia signed a reverse flow agreement that would make use of an old, unused pipeline to begin exporting 2 billion cubic meters, or bcm, to Kiev in October. Exports to Ukraine along this pipeline would rise to 8 bcm by early 2015.

Ukrainian energy officials have since proposed a plan to the EU Commission that would allow Ukraine to increase reverse flows via Slovakia to 30 bcm, Kommersant reported.

According to a UralSib report published Thursday, Gazprom would lose nearly $3 billion in 2016 if the EU accepted the proposal and began selling Russian gas back to Ukraine. The company would end up selling more gas to the EU — where prices range from $360 to $380 per thousand cubic meters and gas is subject to a 30 percent export duty — instead of Ukraine, where the price was previously set at $385 per thousand cubic meters, there is no export duty and transportation costs are lower.

Berlin talks bring Russia and Ukraine closer to resuming ceasefire

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The foreign ministers of Russia and Ukraine agreed in Berlin on Wednesday to hold three-way talks involving pro-Moscow rebels by Saturday to pave the way for a new ceasefire, despite continued fighting that Kiev says has now killed 200 of its troops.

“It is a clear commitment to a multilateral ceasefire,” said German Foreign Minister Frank-Walter Steinmeier after talks with Russia’s Sergei Lavrov, Ukraine’s Pavlo Klimkin and French Foreign Minister Laurent Fabius. Russia and Ukraine continued to blame each other for the violence that marred the 10-day ceasefire, which Kiev declared over on Monday before resuming its military offensive against separatists in the east, many of whom had ignored the truce.

But Lavrov told a joint news conference alongside Klimkin and the two others that they had agreed to work for a “stable, long-term truce”.

“We propose to achieve this through a meeting soon of the Contact Group, which – we hope – will hold a meeting in coming days and agree on the conditions for truce that would satisfy all sides,” said the Russian minister.

That group, representing Ukraine, Moscow and the rebels, with Organisation for Security and Cooperation in Europe (OSCE) mediation, should meet “no later than July 5th with the goal of reaching an unconditional and mutually agreed sustainable ceasefire”, said a document agreed by all four ministers.

Klimkin added a note of caution, saying hostages must be released and Ukraine allowed to control its borders to stop the rebels receiving fresh fighters and weapons. The document said Russia made a commitment to allow Ukrainian border guards across checkpoints in Gukovo and Donetsk to control this.

“The de-escalation of the situation will happen when the peace plan of the Ukrainian president is respected in its totality,” said Klimkin.

Lavrov said Ukrainian President Poroshenko’s decision to end the ceasefire had cost “people’s lives and serious destruction of civilian infrastructure … but better late than never”.


German Chancellor Angela Merkel had warned Moscow shortly before the talks that economic sanctions remained an option unless it backed peace efforts.

“Regarding sanctions against Russia, we have so far reached level two and we cannot rule out having to go further,” Merkel added, referring to measures against Russian officials and firms the West accuses of undermining Ukraine’s territorial integrity.

The European Union has threatened to ratchet up sanctions against the Russian economy unless it reins in the separatists in eastern Ukraine. Moscow denies supporting them.

Separatists fired a shoulder-launched missile that struck and damaged a Ukrainian SU-24 attack plane, a military spokesman said. Five servicemen, including a Ukrainian border guard, had been killed since the renewal of the offensive on Monday night.

This brought to 200 the number of service personnel killed since the start of the conflict, including 150 soldiers, Andriy Lytsenko, a spokesman for Ukraine’s national security and defense council, said.

Hundreds of civilians and rebels have also died.

Poroshenko, under pressure at home to take a tough line on rebels who have been fighting Kiev’s forces since April, refused to renew the 10-day ceasefire on Monday night and ordered an offensive against “the terrorists, militants and marauders”.

That won backing from the United States, but drew criticism from Russia’s Vladimir Putin who said Ukraine’s newly-elected leader had veered off the road to peace.

Separatism erupted in the Russian-speaking east in April, when rebels seized buildings and strategic points, declaring “people’s republics” and saying they wanted union with Russia. Ukraine has been in turmoil since a Moscow-backed president, Viktor Yanukovich, walked away from a free-trade deal with the European Union last year. He was toppled in February after street demonstrations. Moscow responded by seizing Ukraine’s Crimea region in March, before the rebels rose up in the east.

On Friday 48-year-old Poroshenko, defying threats by Russia to carry out retaliatory trade action, signed the EU deal.

Ukrainian forces launch massive assault on pro-Russian separatists in Donetsk, Luhansk oblasts

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DONETSK, Ukraine – New battles raged in Ukraine’s east on July 1 as President Petro Poroshenko announced the end of a shaky 11-day ceasefire and said a new “active phase” of the government’s “anti-terrorist operation” would restart to quash pro-Russian separatists.

“We will attack and we will liberate our land,” Poroshenko said in a televised address just after midnight on July 1. “The end of the ceasefire is our response to terrorists, rebels, looters, all those who mock the civilians who paralyze the economy of the region; who rip the payment of salaries, pensions, stipends; who undermine the railroads, destroy water pipes, those who deprive a normal peaceful life.”

The government’s forces did not waste time, launching their first assaults across Donetsk and Luhansk oblasts even as the president spoke from Kyiv.

Confirming the restart of the counterinsurgency operation was Ukraine’s parliament speaker, Oleksandr Turchynov.

“I had the chance this morning to speak with the interior and defense ministers and can inform you that as of this morning, the active phase of the antiterrorist operation has been renewed,” he told lawmakers early on July 1.

Heavy fighting was reported in the eastern regions from early morning until evening. In Donetsk, separatist gunmen stormed an Interior Ministry building located on the city’s main drag, Artema Street, where they exchanged fire with police who are holding pro-Russian separatists “hostage” inside, according to one rebel fighter.

Another, however, said that the group decided to storm the building after he and others caught word that police had turned over a list of pro-Russian activists to Kyiv. One more fighter gave another story, saying that a group of separatist fighters from nearby Horliva had seized the building – which is on the Donetsk group’s turf – and that they were attempting to take it back. The Kyiv Post could not confirm either version of the event.

In Kramatorsk, mortars and missiles rained down from Ukrainian positions onto insurgents who have controlled the city since April. Six people were killed and at least five were wounded when a bus carrying civilians came under fire there, local news site Kramatorsk.INFO reported. Photographs of the scene showed a bullet-riddled yellow bus and a woman’s body sprawled out in the aisle. It remains unclear which side opened fire on the bus.

Also in Kramatorsk, the 220-meter high TV tower atop Karachun Hill, where Ukrainian government forces had been stationed for weeks, was toppled after an apparent explosion snapped its supports.

Photographs published on the website of local media and shared on Twitter and Facebook showed massive holes in the sides of apartment buildings and craters on the streets of nearby Sloviansk following heavy shelling by Ukrainian troops there.

Igor “Strelkov” Girkin, a Russian citizen and commander of the Sloviansk rebel fighters, said that many civilians in the city and in surrounding villages sustained injuries during the shelling, but that his militia had not suffered any losses, according to pro-Russian blogs.

Meanwhile, two REN TV reporters were wounded in Luhansk region near the border with Russia when Ukrainian government forces shelled the area, a TV station spokesman told the Interfax news agency.

“Our correspondent was injured in Luhansk region, one kilometer from the Russian-Ukrainian border. A REN TV news crew came under mortar fire near the Izvaryne border crossing point outside of Luhansk. Presumably a howitzer projectile exploded near the journalist. Correspondent Denis Lulaga suffered a concussion. He cannot hear anything. Blood is leaking from his ears,” the TV station said, adding that a cameraman also suffered a concussion.

Poroshenko’s announcement came after two four-way calls with the leaders of France, Germany and Russia in which they failed to agree on a solution to end the conflict. Last week, a contact group with representatives of Ukraine, Russia, Europe and the separatists met twice in Donetsk in an attempt to find common ground. Those meetings, too, were unsuccessful.

Even during the ceasefire, fighting continued, with separatists violating the deal more than 100 times and killing 27 Ukrainian troops, authorities said.

The president’s decision to end the failed truce was welcomed by some, including Dmitry Tymchuk, a military analyst close to the Ukrainian government and director of the Kyiv-based Information Resistance think tank. He praised the move, saying, “every day the truce, whatever its political significance, provided tangible reinforcement to the terrorists from a military point of new.”

“A longer truce period would give terrorists a chance to drastically increase their combat readiness,” he added.

For its part, Russia urged Ukraine to reinstall the ceasefire.

“We demand that the Ukrainian authorities refrain from shelling civilian cities and villages in their own country, return to a real, not a fake, ceasefire to safeguard the lives of the people,” the Russian foreign ministry said in a statement on July 1.

Russian President Vladimir Putin also spoke out against the restart of Ukraine’s “anti-terrorist operation.”

“Unfortunately, President Poroshenko has decided to resume battle actions. And we could not – I mean myself and my colleagues from Europe – could not convince him that the road to stable, solid and long-term peace can not go through war,” Putin said in Moscow.